Fungal strain NR 6356, Fusarium merismoides Corda, was discovered as the source of the protein kinase C (PKC) inhibitor, azepinostatin. The strain was identified based on its growth on potato sucrose agar, slender conidial shape, characteristic polyphialide and production of abundant chlamydospores. Fusarium aquaeductuum Lagh. IMI 103658 and Fusarium sp. NR 7222 were also found to produce the same inhibitor. After single colony isolation and medium optimization trials, a more than 30-fold increase in the production of azepinostatin over the original culture was achieved. Azepinostatin selectively and potently inhibited rat brain PKC with an IC50 value of 70 nM. Other enzymes utilizing ATP, including hexokinase, were not affected. The Ki of azepinostatin for PKC was 0.5 nM. The inhibition of PKC was competitive with ATP and uncompetitive with histone.